The FSA has fined Liverpool Victoria Banking Services Limited (LVBS) £840,000 for serious failings in the sale of single premium payment protection insurance (PPI). The penalty was imposed for failings in relation to PPI offered to customers who telephoned LVBS seeking unsecured personal loans between 14 January 2005 and 8 August 2007.
The regulator said that when customers rang LVBS to apply for a personal loan, LVBS added the cost of PPI to the quotation without the customer asking for it. If customers realised they did not have to buy the cover and objected to it, LVBS then put pressure on them to take the PPI. When speaking to customers LVBS did not explain that the cost of the single premium PPI was added to the loan and that as a result customers paid additional interest on the PPI premium for the life of the loan.
LVBS was also found to have provided inadequate information to its telephone customers about the features, exclusions and limitations of PPI and often provided information that was unclear, unfair or misleading. In 97 sales calls reviewed, the FSA found over 60% to be non-compliant.
Margaret Cole, FSA director of enforcement, said: “The LVBS sales process was flawed in its design. The firm has stopped all sales of PPI and is now proposing a comprehensive programme to contact its customers and pay them compensation where appropriate. The FSA expects firms to treat customers fairly, particularly when failings have been identified. This proposal for remedial action sets an example for other firms to follow.”
As part of the redress package agreed by LVBS, the interest paid on the PPI premium will be refunded automatically. The firm will be writing to its PPI customers asking them to review the terms of their PPI policy and offering to pay full redress where appropriate. LVBS agreed to extend the scope of its redress proposals to include a review of all PPI offered via telephone, internet or post between 14 January 2005 and 31 January 2008.
